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The diaper industry has applauded the recent announcement that Associated Hygienic Products acquired fellow private label diaper maker Arquest, Inc. The deal has the potential to create the world's largest manufacturer of private label baby diapers. According to sources, AHP, a unit of Disposable Soft Goods International makes diapers sold at Wal-Mart and other major retailers, while Cranbury, NJ-based Arquest makes the Especially for Babies diapers sold by Babies R Us and Toys R Us, among other things.

The deal between the two companies was rumored for months, according to industry observers who think it will open up opportunities for other U.S. private label players like First Quality and Irving Products. The diaper market in general is expected to benefit from already announced price increased by Procter & Gamble and Kimberly-Clark set to go into effect this summer.

AHP has been making diapers and training pants in the U.S. since 1984 and established state-of-the-art manufacturing plants in Ohio and Texas in recent years. Arquest was formed in 1991 as a spin-off from Johnson & Johnson. Its manufacturing base is in Arkansas.

In announcing the acquisition, AHP said it would not only expand its customer list but also help it provide the broader scope and purchasing power needed to help it compete against long-standing national brands.